Stocks, Bonds Rise as Fed-Hike Bets Ease on Waller: Markets Wrap
(Bloomberg) — Stocks rose and bond yields fell as Federal Reserve Governor Christopher Waller said he’d be willing to support holding rates steady if price pressures continue to show signs of easing.
Money markets pared bets on a September Fed hike. Short-dated Treasuries outperformed. The S&P 500 climbed the most in a month, with megacaps rallying. The dollar was set for its lowest since May. Bitcoin topped $80,000. The yen jumped as traders boosted wagers on Japanese rate increases and were on high alert to the risk of intervention. Oil wavered.
Fed’s Waller said his next decision on rates will be “heavily influenced” by August inflation data due next week. Still, he offered some optimism that price pressures were showing signs of improvement.
“If there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level,” Waller said Thursday at an event hosted by Reuters. “But if inflation comes in hot, I would consider a rate hike.”
He has reaffirmed data-dependence and given an optimistic assessment of recent inflation progress heading into the final inflation report before the September meeting, according to Krishna Guha at Evercore.
“We repeat our call that the Fed is more likely to hold than hike in September, though we think it is close and will indeed turn on the next set of inflation data,” Guha said.
Fed officials will meet again on September 15-16 after leaving rates steady for five straight meetings this year. Swap contracts priced in roughly even odds of a quarter-point increase, down from an about 70% chance earlier this week.
Waller also said he expects upcoming jobs data to confirm the labor market is in a satisfactory state.
US jobs growth got back on track in August, consistent with general steadiness that’s helping the Fed focus more intently on its battle with inflation. Economists estimate the monthly report Friday will show a 55,000 increase in payrolls after an unexpected dip in July. The unemployment rate is seen holding at 4.1%.
“A Goldilocks report will help reduce rate hike concerns, which should lower yields and that could spark a solid rebound in stocks,” said Tom Essaye at The Sevens Report. “Conversely, a ‘too hot’ report will only further reinforce fears of more rate hikes and we can expect yields to rise and stocks to drop.”
A survey conducted by 22V Research shows 48% of investors expect a “mixed/negligible” reaction to the data, 33% said “risk-on” and 19% “risk-off.” The S&P 500 is projected to swing 0.7% in either direction, in line with the average realized move on jobs-report days over the past 12 months, according to options data compiled by Citigroup Inc.
Corporate Highlights:
OpenAI, Anthropic PBC and SpaceXAI were hit by outages on Thursday, according to user reports and company status pages, disrupting customers of three of the leading US AI model makers. Nvidia Corp. agreed to acquire startup Hugging Face in a transaction valued at about $13 billion, adding a popular software platform to the chip giant’s AI empire. Broadcom Inc.’s forecast for AI chip sales failed to impress Wall Street, a sign it’s still in the early stages of challenging Nvidia’s dominance Snowflake Inc. raised its outlook for annual sales, topping estimates, and touted rapid adoption of its AI-assisted coding tool. Hewlett Packard Enterprise Co.’s sales growth failed to meet the lofty expectations of investors. What Bloomberg strategists say…
“Waller’s comments highlight the vacuum created by Fed Chairman Kevin Warsh’s move away from forward guidance, and demonstrates that other Fed officials’ remarks and the market’s interpretation of the data will fill the void.”
—Edward Harrison, Macro Strategy, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 1.1% as of 2 p.m. New York time The Nasdaq 100 rose 1.2% The Dow Jones Industrial Average rose 1.2% The MSCI World Index rose 1.2% Currencies
The Bloomberg Dollar Spot Index fell 0.6% The euro rose 0.4% to $1.1634 The British pound rose 0.4% to $1.3541 The Japanese yen rose 2% to 155.46 per dollar Cryptocurrencies
Bitcoin rose 4.7% to $81,049.92 Ether rose 4.5% to $2,500.92 Bonds
The yield on 10-year Treasuries declined two basis points to 4.75% Germany’s 10-year yield declined three basis points to 3.34% Britain’s 10-year yield declined 10 basis points to 5.13% The yield on 2-year Treasuries declined four basis points to 4.33% The yield on 30-year Treasuries declined two basis points to 5.24% Commodities
West Texas Intermediate crude rose 0.4% to $91.37 a barrel Spot gold rose 2.4% to $4,487.96 an ounce ©2026 Bloomberg L.P.
